Everyone is talking about the importance of making big gifts in 2012, but the critical question for many in Cincinnati, is how much can you realistically afford to gift without jeopardizing your own financial security?
How much can you afford to gift now, with a possible resurgence of the gift tax lurking next year? As you may know, current law allows you gift the fairly huge sum of $5 million (more than $10 million for a married couple) without triggering a gift tax. That law is expiring at year’s end, and it’s anyone’s guess what happens next. It certainly is possible that next year’s tax climate will be much less generous.
So, from a tax planning standpoint, there may never be a better time for you to make a large gift. But, you know that life is about more than tax planning. The real question you need to answer, if you are inclined to make substantial gifts, is whether – and how much – you can afford to give. Wealth Strategies Journal recently published an article, “How Much Can You Gift,” to help you through the decision process.
Some things to consider:
- Your personal goals, especially for retirement. Will they still be adequate after your generous gift?
- Your age and health. Do you have many more income-producing years ahead, or is it possible you may need more money to provide for yourself and your spouse, especially if there are health issues to consider.
Remember, you should not gift away – in any form – assets that are essential for your own financial needs. You can gift away assets to your children (or trusts for them) that you will never need. And, there are estate planning tools that can help you make gifts that you may need, with “just in case” access if you do.
If you have any questions about any of the information contained in this blog, see the estate planning website of Cincinnati attorney, David H. Lefton, or contact him at 513-399-PLAN (7526) or by email at firstname.lastname@example.org.
Reference: Wealth Strategies Journal (November 8, 2012) “How Much Can You Gift”